Montana Income Tax Law in Full

by Rick S.

What are the Income Law Requirements in the State of Montana?

Generally, people do not like the idea of paying income taxes, but the need for taxation is essential for state governments to operate effectively and provide services for the public. Income tax is a monetary charge that is levied on your income by the government. It is the income that is usually generated by businesses and individuals within a state’s jurisdiction. According to the law, it is mandatory for taxpayers such as yourself to file an income tax return annually and to determine what your tax obligations are. It is essential to know that income tax is a source of revenue for the government. The monetary gains are used by the government to fund public services, pay for government obligations, and provide goods for citizens.

In the U.S, some taxes are imposed separately on a federal, state, and local government level. Taxe charges are imposed upon income, payroll, property, sales, capital gains, dividends, imports, estates, and gifts, as well as various fees. The taxes, however, fall much more heavily on labor income than on capital income.

The state of Montana has a progressive state income tax with a high rate of 6.9%. The price is higher than the national average, but Montana has only a few other types of taxes.

The personal exemption amount in Montana is $2,440. You can claim exemptions for you, your spouse and any dependents. Each exemption can be made to reduces your taxable income by the personal exemption amount. Additionally, the state of Montana offers credits to reduce the total tax burden of taxpayers in certain circumstances.

Who is required to file income tax returns in the state of Montana?

You are required to file a Montana Individual Income Tax return if:

- Your federal net income meets the threshold, and

- if you’ve lived or earned income in Montana during the tax year.

It is mandatory for you to file a return if you have had Montana tax that is withheld from your paycheck or if you have paid an estimated income tax, even if you aren’t required to file a return. Montana has seven different tax brackets that correspond with varying levels of income. The first $2,800 is taxed at a rate of 1 percent, pay over $2,800 but less than $5,000 is taxed at 2 percent, and so on. See the Individuals section of Montana's official Website to learn about the state's income tax code.

How do the tax brackets in Montana work?

Montana has seven different tax brackets that correspond with varying levels of income. The first $2,800 is taxed at a rate of 1 percent, income that is over $2,800 but less than $5,000 is taxed at 2 percent, and so on. Technically, there isn't just one "tax bracket" - you are liable to pay all of the marginal tax rates in the state of Montana.

How to file your state tax return in Montana?

You have multiple options to file and pay your state income tax.

- E-file through the Montana DOR My Revenue system.

- E-file using a Free File Alliance vendor. Be aware, and vendors will have different criteria for who qualifies to file for free. You may need to meet age, income or other limitations to be eligible.

- File your single-state and federal return with Credit Karma Tax, which never charges any fee, regardless of your age, income or other factors.

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